How Singapore became Asia’s go-to hub for start-ups

Singapore, despite its modest size and population, is home to more businesses in this year’s ranking of high-growth companies in the Asia-Pacific region than any rival city.

This is not unusual for the city-state of just 6mn people. A trading entrepôt between east and west, the island nation has long been a leading destination for entrepreneurs and investors thanks to its strategic location within south-east Asia, supportive government policies, strong legal frameworks, and a mix of both local and foreign workers.

More recently, this appeal as a base for business has been boosted by Singapore’s neutral status between the US and China, which appeals to companies wishing to protect themselves from geopolitical and supply chain disruptions.

With 93 businesses in the FT’s ranking of high-growth companies in Asia-Pacific, Singapore beat the cities of Seoul and Tokyo — though South Korea and Japan outstripped the nation state on a countrywide basis.

Singapore’s growth companies are varied, too — from such sectors as manufacturing, artificial intelligence, software, commodities and healthcare — underscoring the breadth of businesses that the city can support.

“Singapore is neutral, it is the Switzerland of Asia,” says Dylan Ng, co-founder of Lionsbot, a manufacturer of cleaning robots that is 23rd in the ranking, with a compound annual growth rate (CAGR) of 178 per cent for the period between 2019 and 2022. “This is important with the geopolitical situation globally. There is a big pool of talent, you can deliver to the world and the city has a strong law-abiding reputation,” he adds.

The majority of Lionsbot’s customers are outside Singapore and the company is now focusing on growing in overseas markets, including the US and Europe, after raising $35mn in a series A funding round last year.

But even companies that do not do business in the city-state describe the benefits of having it as a base.

iCare, number 65 on the list this year with a CAGR of 115 per cent, provides access to basic but life-changing appliances — including washing machines, refrigerators and rice cookers — to low-income female factory workers in developing countries, including Laos and Cambodia.

Co-founder Pablo Alonso Caprile, who is based in Cambodia, says having the group’s base in Singapore gives a “layer of safety”.

“The benefits are multilateral. It simplifies paperwork and reporting, while high reporting and accounting standards allow investors comfort,” he says. iCare has its headquarters in the city state but does not have operations or core employees based there.

Singapore is also a fundraising hub for the region and Caprile says he visits frequently because many of iCare’s investors have a presence in the city-state.

The company has a catalogue of appliances and works with factories to allow workers to buy the items they need and pay back in interest-free instalments.

iCare makes its margins from dealers, rather than charging customers and handles the repayments directly with the factories.

“We have been running this successfully since 2015, well before ‘buy now, pay later’ was a household name,” Caprile points out.

Skrya, another Singapore-based company at number 10 in the ranking, also gets most of its revenue from outside the city-state. Skrya helps clients, such as automobile parts companies, to recycle materials including palladium, rhodium and platinum via an app, Catalopedia, which uses AI and 3D to determine the best pricing.

“We are trying to do an old type of business — recycling — in a modern way, with apps and tech,” explains Sivakumar Avadiar, chief executive officer for the five-year-old group.

Skrya, which is profitable, has a number of facilities and a team of roughly 10 employees in Singapore. But it is planning to grow internationally this year, opening a new plant in India, which could add another $30mn-$40mn in revenue, Avadiar says.

Singapore is neutral, it is the Switzerland of Asia

Singapore’s stable reputation, and the ease of setting up a company there, made it the best choice as a base, he adds. However, he has found the cost of running a business in the city has gone up in recent years.

A survey of business sentiment by the Singapore Business Federation in January found that the increase in business costs is the top challenge companies are navigating, especially the cost of manpower.

Even for tech start-ups, such as X0PA AI — a software company that uses artificial intelligence and automation to help clients hire employees better and faster — the environment has been tougher.

“The market had a massive correction in the past few years,” says founder Nina Suri. “We had to correct ourselves and take a step back to focus on more sustainable growth.”

X0PA AI is fundraising now, via a second series A round. Suri says the company expects to break even this quarter and hopes to turn a profit by the end of 2024.

Singapore is X0PA AI’s largest market but the company is now focusing on growing in Europe, the Middle East and Africa, as well as the US.

Suri divides her time between Singapore and London but says Singapore’s ecosystem, which includes resources, talent and government support, such as grants, made it a “no brainer” to be X0PA AI’s base.

“But, for a business like ours you can’t survive and grow enough in just Singapore,” she says. “The government understands that and we got a grant to expand into overseas markets including the United Arab Emirates and the UK.”

However, despite the number of Singapore companies on this year’s list looking to expand beyond the city-state, there are still plenty that see opportunities in its small domestic market.

Doctor Anywhere, which started life as a primary care tele-health start-up, is now growing rapidly offline. For example, it recently started operating a health screening and imaging diagnostics facility. The business is ranked 55th on this year’s list with a CAGR of 124 per cent.

“Our underlying business comes from the region but many people come here for top healthcare,” says Wai Mun Lim, co-founder.

“We are building out our business in the city before replicating many of our services in other countries we operate in the region, including Malaysia and the Philippines. When you tell anyone a business is from Singapore, it means you are legitimate.”